Rio2 Advances Large Scale Gold Project Toward 2026 Production

• Rio2 is constructing the Fenix Gold Mine in Chile with 5 million ounces in measured & indicated resources, fully funded and on track for first gold pour in January 2026.
• The project has low capex (~$120 million for 2025), simple open-pit mining with low strip ratios (0.85:1 initially, 1.2:1 in expansion phase), and plans to expand from 100,000 to 300,000 ounces annually.
• Current challenges include managing winter construction timelines and water logistics (using trucked water initially, with plans to secure desalination plant water for expansion).
• Management has successfully navigated regulatory hurdles, with construction officially underway and the project at ~1,130 workers approaching the expected peak of 1,200.
• The company's market valuation (~$250 million USD) is considered low by management given the project's scale and potential, with significant upside expected once production begins.

Rio2 Limited is advancing the Fenix Gold Project in Chile, one of the few substantial new gold production stories in the mining sector. In a landscape dominated by mergers rather than new supply, the Fenix Gold Project stands out with its 5 million ounces of gold in measured & indicated resources. Construction is fully funded and officially underway, with a targeted first gold pour in January 2026. The article provides insights into the project's progress, challenges, and growth potential from Executive Chair Alex Black and President & CEO Andrew Cox, who respectively manage the corporate and technical aspects of the company.

Project Overview & Construction Status

The Fenix Gold Project is located in Chile's Atacama Desert at elevations approaching 5,000 meters. Construction officially began in October 2024, with the team mobilizing rapidly due to pre-construction activities that had been initiated back in 2022 with early financing from Wheaton Precious Metals. Currently, the project has approximately 1,130 workers on site, nearing the expected construction peak of 1,200 workers.

Key infrastructure development includes a 565-person camp already constructed, and the team is focusing on completing critical components ahead of the winter season. As Andrew Cox explained: 

"The biggest risk for us right now is probably the winter...we timed our construction to start in the spring...the target is to have the leach pad, 10 hectares of that done with plastic and overlining material on top to protect it for the winter." 

The ADR plant construction is also progressing, with aims to have it enclosed by May so interior work can continue uninterrupted during winter.

The project benefits from access to a paved international road linking Copiapó with Argentina, providing reliable transportation to the site. The team has leveraged existing infrastructure, having purchased an old processing plant and facilities for only $1.5 million in 2019/2020, which now serves as their camp at 3,200 meters elevation.

Mining & Production Plans

Fenix Gold's initial phase will mine just 1.7 million ounces of the total 5 million ounce resource. Production is expected to reach around 70,000 ounces in 2026 (partial year), ramping up to 100,000 ounces annually by 2027. The company is already planning an expansion to approximately 300,000 ounces per year, with studies underway to assess the expansion from 20,000 tons per day to about 80,000 tons per day processing capacity.

The deposit features a favorable profile with higher-grade material near the surface, allowing for optimized early cash flows. The mining operation benefits from minimal pre-stripping requirements, as the mineralization outcrops at surface across the extinct volcanic peaks that make up the deposit. This geological advantage contributes to the low strip ratios of 0.85:1 in the initial phase, increasing to only 1.2:1 in the expansion phase. As Alex Black highlighted: 

"When you look at our measured & indicated resources that you can see everything outcrops at surface. We're not doing any pre-stripping or anything like that...look at the massive size of that ore body. This is an ore body of 400 million tons of material...that hangs together very very well."

Interview with Chairman Alex Black & Andrew Cox, CEO, of Rio2

Water Management Strategy

Initially, Fenix Gold will operate using trucked water from Copiapó. The team has constructed a 2,000 cubic meter water tank at the 4,300-meter elevation processing site, with the necessary infrastructure for water trucks to deliver and unload efficiently.

For the longer term, the company is evaluating three desalination plant options in Copiapó. They're working collaboratively with Kinross (which operates the nearby La Coipa mine) to develop a shared water solution that could also potentially serve other companies in the region, including a planned lithium project. This strategic approach aims to create economies of scale and distribute infrastructure costs.

The processing design includes a PLS (Pregnant Leach Solution) pond that will serve as a two-week water reservoir, providing operational buffer in case of any supply disruptions. The company expects to finalize its long-term water solution during 2025 as part of its expansion study.‍

Regulatory Environment & Community Relations

The company has received its environmental approval (EA) with monitoring conditions, which they are actively implementing. The management team emphasized their continuous communication with regulators and compliance with all requirements.

The project's remote location in the Atacama Desert minimizes many typical environmental and community impact concerns. There are no population centers nearby, no surface water to be affected, and limited flora and fauna in the immediate project area. The waste dump and leach pad are being constructed in natural valleys with no downstream impacts, and there is no groundwater table that could be affected by operations.

The company noted that Chilean construction standards are particularly stringent, especially regarding earthquake, wind, and snow loading requirements, which added approximately 30% to construction costs compared to their Peruvian experience.

Financial Structure & Value Proposition

The Fenix Gold Project has a relatively low capital expenditure of approximately $120 million for 2025. The company secured financing through a combination of equity raises and arrangements with Wheaton Precious Metals, which provided both a streaming agreement and gold prepay facility.

Management views the current market valuation (under $250 million USD) as substantially undervaluing the project given its scale and near-term production status. They draw comparisons to other recent producers that have grown to multi-billion dollar valuations once reaching production.

The simplicity of the project is emphasized as a key advantage. As Alex Black stated: 

"This is simple. You don't want to make mining complex. I can tell you that given our experience and it's all about simplicity. It's an earthmoving exercise."

Growth Potential

Beyond the planned expansion from 100,000 to 300,000 ounces annually, Rio2 sees significant exploration upside. The deepest drilling to date (600 meters below surface) remains in oxide material with no transition or sulfide zones encountered, suggesting potential for additional oxide resources at depth.

The company plans to shift from grade control drilling to exploration drilling once production begins, aiming to replace depleted ounces and potentially grow the resource beyond the current 5 million ounces. Management believes the Fenix Gold project could ultimately exceed the current resource estimate over its lifetimFThe expansion study underway in 2025 will define the pathway to tripling production. The company has intentionally designed its current infrastructure to accommodate expansion, including platforms sized for additional processing trains and valleys large enough for expanded waste and leach facilities. This foresight should reduce the capital intensity of the future expansion.

The Investment Thesis for Rio2

• Near-Term Production: First gold pour scheduled for January 2026; expected production of ~70,000 ounces in 2026, ramping to 100,000 ounces annually by 2027.
• Significant Scale Potential: Clear pathway to expand from 100,000 to 300,000 ounces annually, transforming into a world-class gold project with studies underway.
• Low-Cost Structure: Favorable geology with outcropping mineralization requiring minimal pre-stripping, low strip ratios (0.85:1 initially, 1.2:1 in expansion), and higher-grade material near surface for optimized early cash flow.
• Fully Funded: Construction financing secured through equity raises and Wheaton Precious Metals arrangements, with ~$120 million capex for 2025.
• Experienced Management: Leadership team with track record in developing gold projects, employing a "simple" approach to mining with emphasis on execution excellence.
• Expansion-Ready Infrastructure: Current platforms and facilities designed with expansion in mind, reducing future capital intensity for the production upgrade to 300,000 ounces.
• Exploration Upside: Deepest holes (600m) still in oxide material, suggesting potential for additional resource growth beyond the current 5 million ounces.
• Valuation Disconnect: Current market cap (~$250M USD) represents a fraction of comparable producers' valuations, suggesting significant rerating potential upon successful production.

Macro Thematic Analysis

The Fenix Gold Project emerges at a critical juncture for the gold mining industry, which faces a structural supply deficit. Gold prices have established a new base above $2,000/oz, reaching unprecedented levels near $3,000/oz in early 2025, driven by geopolitical uncertainties, inflation concerns, and central bank buying. Meanwhile, the industry has undergone significant consolidation through mergers and acquisitions, absorbing existing production rather than developing new sources. Major producers are contending with grade decline, resource depletion, and increasingly complex jurisdictional challenges.

Rio2 addresses this supply gap with Fenix Gold, offering genuine new production in a landscape starved of major new projects. The mining sector's capital discipline following previous cycles has limited new project development, making projects like Fenix increasingly valuable. Additionally, the industry faces mounting ESG scrutiny, making Fenix's remote location in Chile's Atacama Desert advantageous, with minimal population impacts and stringent adherence to environmental standards.